The TIDAL Wave Is About to Crash

Jay-Z's boldest move might be his biggest gaffe.

You probably don't need to read Bloomberg's thorough dismantling of streaming service Tidal's business plan to know that the company is in deep shit; earlier today, reports suggest that Sony could pull its artists from the service's catalog. (A roster that includes — naturally — Beyoncé). This news comes as the latest in a series of blows from the would-be player in the streaming service marketplace, a bid for dominance that wobbled from the start

Bloomberg's article goes the distance to display Jay-Z's relatively spotless business acumen in light of just how big a misstep Tidal seems to be. Given that Jay-Z is worth around $520 million — he purchased the Norwegian company Aspiro last year for $56 million and used that proprietary technology to build Tidal — this investment is categorically much larger than, say, giving the Spotted Pig 50k or his .16% stake in the Brooklyn Nets. (A stake he sold, at a profit, when he founded Roc Nation Sports and was thus barred from team ownership). By throwing roughly 10% of his worth into Tidal — there are a few different ways to look at this, so consider these figures rough — Jay-Z's skin in the game is much larger than anything he's done before.

While banks and marquee investors drop dough like this all the time, it's easier to see why transactions like this can be viewed as these institutions taking flyers. Thus, Goldman Sachs or Warren Buffett or whoever else are immune from the lion's share of media scrutiny, a privilege Jay-Z has not been afforded in this case. However, the speed of Tidal's deterioration — Tidal's CEO stepped down mere days after the press conference which is, uh, never the best sign — and Tidal is currently the ninth most popular streaming service on the web. (It should be mentioned that none of these services, including Spotify, are anywhere close to generating anything resembling a net revenue at the moment). 

Jay-Z's biggest gamble turned out to be his worst gaffe. Though I'd disagree with the Bloomberg article's final thought: that Jay-Z is fundamentally a cynic. While the media beats up on Jay-Z, it might also show how powerless the principles may have been the whole time. In their bid to change the bad business of streaming, it only exposed just how imprisoned even the world's biggest artists have become to their labels: Jay-Z is still in the process of buying back his own masters and his wife doesn't even control where her music lands. It goes to show that, even with the outbreak of new ways to stream music, the power still resides where it always has: with the publishers.